The Industrial & Prudential Investment Company - Sleep Easy !

The Industrial & Prudential Investment Company Limited ( BSE Code:501298) is a Mumbai based 94-year-old investment company. It is a zero debt company and along with its 100% subsidiary, New Holding & Trading Company limited has an excellent equity investment portfolio. Mr.A.V.Setalvad, who till recently was also the Chairman of KSB Pumps limited, heads the company.

Consolidated Financial Highlights:

Equity: Rs.0.58 crores

Debt: Nil

Current Market Cap: Rs.89 crores (as per price of Rs.1530 on Jan 10,2011)

2009-10 financial highlights:

Revenue: Rs.4.28 crores

Net Profit: Rs.3.85 crores

EPS: Rs.66

Dividend: Rs.12 per share

Equity Portfolio (Includes portfolio of its 100% subsidiary New AgeHoldings)

	Number of	Market price	Value
	shares	on Jan 10,2011	(Rs.)
ACC. Limited	7000	1023	7161000
Amara Raja Batteries Limited	52500	189	9922500
Andhra Cements Limited	40000	13	520000
Areva T and D India Limited	50000	312	15600000
BASF India Limited	7000	612	4284000
Bharat Electronics Limited	3000	1715	5145000
BEML Limited	8500	971	8253500
Bharat Forge Limited	16000	356	5696000
Bharti Airtel Limited	17500	341	5967500
Bosch Limited	2000	6425	12850000
Century Textile and Industries Limited	1000	400	400000
Dish TV India Limited	5462	64	349568
DR. Reddy’s Laboratories Limited	4000	1653	6612000
Gail (India) Limited	28500	503	14335500
Great Eastern Shipping Company Limited	30400	314	9545600
Great Offshore Limited	7600	366	2781600
Hindustan Unilever Limited	73000	309	22557000
IDBI Bank Limited	15000	151	2265000
Indian Hotels Company Limited	79200	99	7840800
Infosys Technologies Limited	108000	3411	368388000
ITC Limited	9000	170	1530000
Karur Vysya Bank Limited	19200	501	9619200
KSB Pumps Limited	3570000	515	1838550000
Monsanto India Limited	800	1800	1440000
Nagarjuna Construction Company Limited	54000	131	7074000
Nestle India Limited	14000	3800	53200000
NTPC Limited	21000	191	4011000
Orient Abrasives Limited	90000	36	3240000
Piramal Glass Ltd.	4356	110	479160
Piramal Healthcare Ltd.	20000	469	9380000
Piramal Life Sciences Limited	2000	110	220000
Praj Industries Limited	19000	78	1482000
Ranbaxy Laboratories Limited	5173	572	2958956
Reliance Communications Limited	8000	136	1088000
Reliance Industries Limited	16000	1044	16704000
Seamec Limited	8000	133	1064000
Selan Exploration Technology Limited	10000	376	3760000
Siemens Limited	25000	775	19375000
State Bank of India	3800	2577	9792600
Tata Consultancy Services Limited	14000	1134	15876000
Tata Motors Limited	4000	1197	4788000
Tata Motors Limited (DVR)	7850	739	5801150
Tata Power Company Limited	26000	1369	35594000
Tata Steel Limited	10800	660	7128000
Tata Teleservises (Maharashtra) Limited	80000	19	1520000
Titan Industries Limited	14000	3317	46438000
TV TO-DAY Network Limited	8000	65	520000
Wire And Wireless (India) Limited	4750	11	52250
Zee Entertainment Enterprises Limited	9500	133	1263500
Zee News Limited	429	13	5577
BASF India Ltd	800	612	489600
Cambridge Solutions Limited	100	46	4600
Dish TV India Limited	1150	64	73600
GlaxoSmithKline Pharmaceuticals Limited	1000	2390	2390000
GTL Limited	4000	415	1660000
GTL Infrastructure Limited	8000	41	328000
ICICI Bank Limited	6	1013	6078
Infosys Technolgies Limited	4800	3411	16372800
ISMT	43750	61	2668750
KSB Pumps Limited	130000	515	66950000
Mahanagar Telephone Nigam Limited	7000	53	371000
Neyveli lignite Corporation Limited	10000	125	1250000
Onward Technology Limited	2500	50	125000
PVP Ventures Limited	100	12	1200
State Bank of India	3300	2577	8504100
Tata Chemicals Limited	700	375	262500
Tata Steel Limited	6886	660	4544760
Wire & Wireless (India) Limited	1000	11	11000
Zee Entertainment Enterprises Limited	2000	133	266000
Zee News Limited	904	13	11752
Mutual Funds + unlisted			76659259
Current investments			28000000
Mutual Funds ( New Holdings)			5000000
cash			7100000
			2837478960
per share value			4892
Market price of Industrial & Prudential			1533
Discount to per share value			68.3

Most of the above are long- term investments and the acquisition cost of the total quoted equity held by the company is just around Rs.24 crores. The total current market value as shown above is approx Rs.283 crores.

At the current market price of Rs.1530 the company is available at a market cap of Rs.89 crores which is less than half of the value of its holding in just KSB Pumps. The per price value of its holdings as per current market price is approximately Rs.4892 per share, while the stock is available at Rs.1530 per share. Normally most Holding companies, depending on the quality of the underlying assets and pedigree of management trade at 30%-50% discount.As shown above, Industrial & Prudential currently trades at approx 68% discount to current  market value.

The future of the company to a large extent is linked to the performance of its associate company- KSB Pumps, in which it hold 21.26% promoter holding. The current year has been a subdued year for KSB Pumps with margins remaining under pressure due to lower margin order intake during the global recession period.KSB Pumps has a very bright future as it is one of the few suppliers with the capability to produce special pumps required for Nuclear power stations.

This is a very simple, uncomplicated holdings play run by a conservative yet efficient management with a very high degree of integrity. Patient investors can use this opportunity to invest in this stock and wait for market to pay the correct price within the next 24 months.

At the time of writing this report, the author /his family have an investment interest in the stock mentioned above. Under no circumstance does the information in this report represent a recommendation to buy or sell the above-mentioned stock.  This report has been prepared and issued on the basis of publicly available information, internally developed data & other sources believed to be reliable. This is just a suggestion solely for information purposes and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Readers using the information contained herein are solely responsible for their actions and are advised to satisfy themselves before making any investments.